TRENDS TO WATCH – LATE 2017 INTO 2018
DESPITE DECLINES IN TOTAL MULTIFAMILY SALES AT MID-YEAR 2017,
PRICING WILL REMAIN ROBUST NATIONALLY:
After two years of record-setting volumes and $580 billion nationally in transactions over the
last five years, the pace of investment activity has slowed. Multifamily investment sales saw $30.5 billion of activity in the second quarter of 2017. While this figure rebounded in comparison to the $24.8 billion figure recorded for the first quarter, year-to-date volumes are 22.3 percent off the pace of 2016’s record-setting activity. Overall, roughly 4,400 and 4,600 properties sold in the successive years of 2015 and 2016, respectively. Comparatively, only 1,538 properties have sold so far in 2017, highlighting a clear lack of opportunity. A nearly 60 percent decline in high-rise transactions is driving volume declines. In spite of these declines, overall pricing for multifamily continues to appreciate, as shown through Real Capital Analytics’ apartment property price index. The headline multifamily index has increased 8.6 percent year-over- year as of May 2017. Non-major markets are currently driving appreciation, as the six major gateway markets (New York, San Francisco, Washington, DC, Los Angeles, Chicago and Boston) have only appreciated 7.1 percent in the past year. Yields held steady at 5.4% nationally, yet cap rates in tertiary markets have compressed as more investors have moved into these markets in search of greater returns
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